The ACIT, 1(2), Bhopal V. M/s Danish Housing Cooperative Society Ltd., Bhopal

ITA 143/IND/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2962 (ITAT-INDORE)
• Duration Of Justice: 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 18-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRIDULA BAJPAI
• Keywords: Sale consideration of property below Jantri Value; Capital asset
• Section: 43CA; 50C; 28

Judgement Text

1 INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.143/IND/2013 A.Y. 2009-10 ACIT 1(2), BHOPAL :: APPELLANT VS M/S DANISH HOUSING COOPERATIVE SOCIETY LIMITED BHOPAL PAN AAAD 1536H :: RESPONDENT APPELLANT BY SMT.MRIDULA BAJPAI RESPONDENT BY SHRI AMIT JAIN DATE OF HEARING 17.7.2013 DATE OF PRONOUNCEMENT 17.7.2013 O R D E R PER JOGINDER SINGH , JUDICIAL MEMBER THE ONLY ISSUE RAISED IN THIS APPEAL IS THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION O F RS. 2,94,39,000/- MADE BY THE ASSESSING OFFICER ON ACCO UNT OF LONG TERM CAPITAL GAIN AS PER SECTION 50C OF THE IT ACT. 2 2. DURING HEARING, WE HAVE HEARD SMT. MRIDULA BAJPA I, LEARNED CIT DR AND SHRI AMIT JAIN, LEARNED COUNSEL FOR THE ASSESSEE. THE CRUX OF ARGUMENTS ON BEHALF OF THE REVENUE IS T HAT AS PER SECTION 50C OF THE INCOME TAX ACT, WHERE THE SALE C ONSIDERATION IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY THE S TAMP VALUATION AUTHORITY, THE VALUE SO ADOPTED OR ASSESSED SHALL B E DEEMED TO BE THE FULL VALUE OF CONSIDERATION RECEIVED AS A RESUL T OF SUCH TRANSFER. IT WAS ALSO POINTED OUT THAT IN SPITE OF OPPORTUNITIES PROVIDED TO THE ASSESSEE BY THE LEARNED ASSESSING O FFICER, THE ASSESSEE COULD NOT FURNISHE ANY DETAILS REGARDING C OST OF ACQUISITION OF THE LAND, THEREFORE, THE ASSESSMENT ORDER WAS SUPPORTED. ON THE OTHER HAND, THE LEARNED COUNSEL F OR THE ASSESSEE DEFENDED THE IMPUGNED ORDER BY SUBMITTING THAT AS PER THE PROVISIONS OF SECTION 53A OF THE TRANSFER OF PR OPERTY ACT, THE TRANSFER OF LAND SHALL BE DEEMED TO HAVE TAKEN PLAC E IN THE YEAR IN WHICH SALE AGREEMENT WAS ENTERED INTO AND NOT IN THE YEAR IN WHICH MERE REGISTRATION OF THE PROPERTY TOOK PLACE IN THE NAME OF ULTIMATE BUYER. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE, A HOUSING COOPERATIVE SOCIETY, ENGAGED IN DEVELOPMENT 3 OF LAND AND THEREAFTER PROVIDING TO THE MEMBERS ON COST TO COST BASIS, DECLARED NIL INCOME IN ITS RETURN FILED ON 3 0 TH MARCH, 2009. SUBSEQUENTLY, ASSESSMENT WAS COMPLETED, DETERMINING THE TOTAL INCOME AT RS. 2,94,39,000/- ON 28.12.2011 U/S 143(3 ) OF THE ACT, MAKING CERTAIN ADDITIONS/DISALLOWANCES. ON APPEAL, THE LEARNED CIT(A) DELETED THE ADDITION WHICH IS UNDER CHALLENG E BEFORE THE TRIBUNAL. THE BASIS OF MAKING ADDITIONS/DISALLOWANC ES BY THE LEARNED ASSESSING OFFICER IS THAT TRANSFER OF CAPIT AL ASSET AND RELEVANT PROVISIONS OF THE ACT SHALL APPLY IN THE P RESENT APPEAL AND ALSO AS PER SECTION 50C OF THE ACT, THE SALE CO NSIDERATION IS LESS THAN THE VALUE ADOPTED/ASSESSED BY THE STAMP V ALUATION AUTHORITY, THEREFORE, THE VALUE SO ADOPTED OR ASSES SED SHALL BE DEEMED TO BE FULL VALUE OF THE CONSIDERATION RECEIV ED AS A RESULT OF SUCH TRANSFER. WHEREAS THE RELIEF GRANTED BY THE LEARNED CIT(A) WAS ON THE BASIS THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE ARE AUDITED BY THE REGISTRAR OF COOPERATIVE SOCIETIES A ND THE TRANSFER DEEDS WERE REGISTERED DURING THE YEAR UNDER CONSIDE RATION. IT HAS ALSO BEEN OBSERVED THAT THE ASSESSING OFFICER F AILED TO PROVE THAT THE CONSIDERATION TO THE TUNE OF RS. 1,47,63,0 00/-, RS.1,05,48,000/- AND RS.41,28,000/- WAS ACTUALLY RE CEIVED FROM THE BUYERS. THERE IS UNCONTROVERTED FINDING IN THE IMPUGNED 4 ORDER THAT THE ASSESSEE SOCIETY IS SOLELY ENGAGED F OR THE PURPOSES OF DEVELOPMENT OF LAND AND PROVIDING THE SAME TO IT S MEMBERS ON COST TO COST BASIS AND SOME OF THE PIECES OF LAND W HICH WERE NOT PLOTTABLE WERE DISPOSED OF TO OTHERS WITHOUT DEVELO PMENT. IT WAS DULY EXPLAINED RIGHT FROM THE ASSESSMENT STAGE ITSE LF BY THE ASSESSEE THAT SINCE THESE PIECES OF LAND WERE NOT F IT FOR PLOTTING WERE SOLD BY THE ASSESSEE IN EARLIER YEARS BY WAY O F SALE AGREEMENTS TO VARIOUS PARTIES AND THE POSSESSION WA S HANDED OVER IN EARLIER YEARS AND SIMILAR IS THE POSITION F OR CONSIDERATION WHICH WERE RECEIVED BY CHEQUE WITH CLEAR STIPULATIO N THAT WHENEVER REGISTRATION IS REQUIRED FOR TRANSFER OF T HOSE PIECES OF LAND, THE ASSESSEE SOCIETY WILL DO THE NEEDFUL AS P ER THE REQUIREMENTS OF THE BUYERS WHETHER IN THEIR OWN NAM ES OR IN THE NAMES OF OTHER PERSONS WITH A SPECIFIC CONDITION TH AT THE EXPENDITURE FOR SUCH TRANSFER WILL BE BORNE BY THE PURCHASER. WE FURTHER FIND THAT AS PER THE AUDITED BALANCE SHEET, THE ASSESSEE HAD BEEN CONTINUOUSLY SHOWING THE PIECES OF LAND AS TRADING ASSET. THERE IS NO EVIDENCE ON RECORD THAT THE ALLE GED CONSIDERATION, AS MENTIONED IN THE ASSESSMENT ORDER , WAS EVER RECEIVED BY THE ASSESSEE FROM THE BUYERS. THERE IS NO SUCH MENTION OF SUCH CONSIDERATION IN THE SALE AGREEMENT S. EVEN 5 OTHERWISE, IF THERE IS VIOLATION OF STAMP ACT, IT M AY HAVE ITS OWN REPERCUSSION UNDER ANY OTHER ACT BUT THE ASSESSEE M AY NOT BE PENALISED ON PRESUMPTIVE BASIS UNDER THE INCOME TAX ACT. IT IS NOT IN DISPUTE THAT THE LAND SO SOLD BY THE ASSESSE E WAS HELD BY IT AS STOCK IN TRADE WHICH WAS SOLD IN THE NORMAL C OURSE OF BUSINESS. EVEN AS PER THE FINDING OF THE ASSESSING OFFICER, THE ASSESSEE HAS DULY ENTERED INTO AGREEMENT AND POSSES SION OF THE SAME WAS ALSO GIVEN ACCORDING TO WHICH THE SAME WAS TRANSFERRED AS PER THE PROVISIONS OF SECTION 247 READ WITH SECT ION 53A OF TRANSFER OF PROPERTY ACT. THE PLEA OF THE ASSESSIN G OFFICER WAS THAT SALE CONSIDERATION SHOWN IN THE AGREEMENT WAS MUCH LOWER THAN THE VALUE DETERMINED BY THE REGISTRAR WITH RES PECT TO THE SAID LAND. IN THE RESULT, DIFFERENCE IN THE VALUE DETERMINED BY THE STAMP VALUATION AUTHORITY FOR STAMP DUTY PURPOSES V IS-A-VIS THE VALUE MENTIONED IN THE AGREEMENT SO MENTIONED BY TH E ASSESSEE WAS ADDED BY THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SECTION 50C. SINCE THE LAND SOLD BY THE ASSESSEE WA S HELD BY IT AS STOCK IN TRADE, PROFIT ARISING THEREFROM IS LIABLE TO BE TAXED AS BUSINESS PROFIT RATHER THAN CAPITAL GAINS. SECTION 50C IS APPLICABLE WHILE COMPUTING THE PROFIT ON SALE OF CA PITAL ASSET U/SS 45 TO 49 OF THE IT ACT WHEREIN CAPITAL GAIN IS COMPUTED. 6 HOWEVER, IN THE INSTANT CASE BEFORE US, THE PROFIT ON SALE OF LAND WAS LIABLE TO BE TAXED AS BUSINESS PROFIT WHICH IS COMPUTED U/S 28 TO 44 OF THE IT ACT. SINCE SECTION 50C IS NOT AP PLICABLE IN THE CASE OF BUSINESS PROFIT, WE DO NOT FIND ANY INFIRMI TY IN THE CONCLUSION DRAWN BY THE CIT(A). OUR VIEW IS FURTHE R FORTIFIED BY THE AMENDMENT BROUGHT BY FINANCE ACT, 2013 BY INSER TION OF SECTION 43CA WHEREIN SECTION 50C WAS SPECIFICALLY M ADE APPLICABLE TO TRANSFER OF ASSETS OTHER THAN CAPITAL ASSETS WITH EFFECT FROM 1.4.2014 I.E. A.Y. 2014-15. HOWEVER, TH E INSTANT CASE BEFORE US RELATES TO THE A.Y. 2009-10 IN WHICH SECT ION 50C IS NOT APPLICABLE. IN THIS VIEW OF THE MATTER, WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) AND CONFIRM THE SAME. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS D ISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 17.7.2013. SD SD (R.C.SHARMA) (JOGINDER SINGH ) ACCOUNTANT MEMBER JUDICIAL ME MBER DATED: 17.7.2013 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE DN/- 7